Despite recent data showing rental supply is at record lows, it’s good news for those looking to sell their homes, especially in one state’s capital city.
New analysis from PropTrack, released on Monday, shows the number of new rental listings nationally fell 5.7 per cent in the year to September – the lowest September level of new rental listings in more than a decade.
The total number of listings also fell to a record low after dropping 7.1 per cent year-on-year.
This low supply, and an easing of new builds, won’t do much to help the nation’s ongoing housing crisis.
But it means home and rental prices in Perth are tipped to soar, more so than in other state capitals.
Real Estate Australia (REA) Group senior economist Eleanor Creagh said Perth was the most competitive housing market in the country right now.
“With home prices up 10.90 per cent over the past year, Perth is Australia’s top performing capital city market when it comes to price growth,” Ms Creagh wrote in analysis for realestate.com.au.
“That’s more than five times the historic average pace of annual growth experienced in Perth, bringing prices to a record high.”
Ms Creagh said Western Australia also had the biggest increases in advertised rents over the past year after Sydney – regional WA up 16.7 per cent year-on-year, and Perth up 14.9 per cent year-on-year.
“The critical lack of available rentals is causing rental prices to increase at a rapid pace,” she said.
PropTrack’s data shows Perth has overtaken Adelaide as the strongest housing-price growth market, with buyer demand remaining strong but supply staying low.
“Limited supply amid strong buyer demand has resulted in a sellers’ market, with prices in Perth outpacing all the other capitals,” Ms Creagh said.
And while housing prices in other states fell due to a campaign of interest rate rises from the Reserve Bank, WA bucked the trend.
“Despite recent gains, Perth housing values remain affordable compared to other capital cities after a decade of underperformance relative to east coast capitals,” she said, noting Darwin is the only capital with a lower median dwelling value.
“The comparative affordability of homes, population growth, a shortage of housing and very tight rental markets are likely to continue to buoy both home price growth and rental price growth in Perth.”
It’s a positive sign as we head into 2024, as it’s hoped more investors will open up more rental supply.
In terms of rentals, Real Estate Institute of Western Australia chief executive Cath Hart said listings were likely to remain low for the remainder of the year.
“Supply remains the greatest challenge facing the market, particularly the rental market,” Ms Hart said.
“We welcomed recent government announcements addressing impediments to supply … but, while it’s important to increase supply, we also need a legislative environment that supports investment.
“Our market relies heavily on investors, they supply about 85 per cent of properties in the private rental market. They can easily put their money elsewhere – and they will.”
Ms Hart said investors left the market in droves after the Covid evictions moratorium ended and changes were made to housing legislation.
“While the WA government has ruled out rent caps and rent freezes, investors are tentatively waiting on the outcomes of the Residential Tenancies Act reforms,” she said.
The PropTrack report comes as the Australian Bureau of Statistics (ABS) released its latest new housing lending report, showing investor lending was up 1.6 per cent in WA in September.
CommSec economist Craig James said it means investors still see value in property investments.
“High migration numbers and tight rental markets are key influences,” Mr James said of the ABS figures.
“Investor home loans were not just up (in September, up 2 per cent) but were also up 2.6 per cent on the year, increasing for six of the past seven months, reflecting the recovery in home prices and demand.”
The PropTrack report also found that the Perth median house price rose to a new high of $575,000 in October, an increase of 0.9 per cent from September and 6.5 per cent from October 2022.
There was also a 2.7 per cent increase in listings on reiwa.com.au in October compared with the 30-year low set in September, but that’s still 37.4 per cent down on the same time in 2022.
Perth’s median dwelling rent price rose to a new record of $590 per week in October – a 1.7 per cent increase on September and 18 per cent higher than the same time last year.
The median weekly rents for houses and units were stable at $600 and $550 per week respectively.